Opinion piece Daniel Milkus, Aengevelt Immobilien:
An increasingly popular sub-asset class among investors is the social infrastructure segment. As a rule, this refers to long-term leases with, for example, schools, daycare centres, universities, police/rescue/fire brigade stations or similar official uses.
In view of the increase in global conflicts and corresponding migration movements, refugee accommodation has developed into a new type of property within this sub-asset class. As is usual with social infrastructure, the need is defined politically, regardless of whether the lease was concluded directly or as a guarantor with the municipality or another public sector or a renowned external operator.
However, in order for the state or the municipality to be able to accommodate the refugees in a humane manner, private real estate investors are needed to construct and operate the buildings. As with all other types of real estate, this requires monetizing the property as a capital market product.
There are prominent role models for this. When the state was unable to remedy the glaring housing shortage after the end of the Second World War, social housing was invented, which provides incentives to private investors to create affordable housing for low-income and other needy households through various funding instruments, including low-interest construction loans, the allocation of low-cost plots of land, and building cost and expense subsidies.
Against the backdrop of global developments, we will have to reckon with more and more waves of refugees in the future. And the public sector is dependent on private investors providing the necessary accommodation and that the framework conditions are designed in such a way that this is economically viable.
Nevertheless, investors should pay attention to the fact that the objects can be used by third parties – because we all wish that humanity should still succeed in creating a more peaceful world.
